Unethical Practices and Behavior in Accounting
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Unethical Practices and Behavior in Accounting The Sarbanes-Oxley (SOX) Act of 2002 was passed by the congress to protect investors from fraudulent accounting activities by organizations (Hart, 2009). Investors depend on the information that they receive from accountants to make investment decisions and hence if incorrect information is provided, the investors make inaccurate decisions, which could be costly. Section 302 of the SOX Act makes it mandatory for the accuracy of reported financial statements to be certified by senior management. In addition, section 404 of the Act influences the quality of the financial statements by specifying that the management should establish internal controls (Hart, 2009). However, in spite of the emphasis of the SOX Act, accountants continue to practice unethical behavior in accounting. In his article, “What Are the Causes of Ethical Lapses in Accounting?” Jagg Xaxx outlines four situations that might lead to unethical practices and behavior in accounting. Xaxx has been a writer since 1983, focusing mostly on environmental issues, Buddhist iconography, and surrealism. For more than 12 years, Xaxx worked as a cabinetmaker and in house building and renovations. Xaxx holds a PhD in art history and has in depth knowledge in different fields. In this article, Xaxx identifies four reasons why accountants engage in unethical behavior. The first reason is greed for money. The fact that accountants deal with huge sums of money may easily tempt people of a greedy nature. Accounting crimes do not involve guns and breaking into houses, and greedy people may consider it a friendly form of theft. Money is the only item that does not experience diminishing marginal utility; those who have money want and yearn for more.